Esso Resources Canada Limited v. Her Majesty the Queen, [1988] 2 CTC 312, 88 DTC 6469

Reed, J.: —The facts in this case are not in dispute. The question raised is whether the plaintiff can obtain a refund of certain excise taxes paid pursuant to part IV.1 of the Excise Tax Act, R.S.C. 1970, c. E-13 as amended. Part IV.1 is entitled "Natural Gas and Gas Liquids Tax". It was added to the Excise Tax Act by S.C. 1980-81-82-83, c. 68, s. 43. (I shall hereafter refer to the consolidated version of the Excise Tax Act as found in R.S.C. 1985, c. E-15 even though that consolidation is not yet in force; Part IV.1 in that consolidation becomes Part V.)

Part V was added to the Excise Tax Act in 1982, as part of the government's National Energy Program. Section 30 (of R.S.C. 1985, c. E-15) states:

The purpose of this Part is to provide legislative authority for the imposition of a natural gas and gas liquids tax as an essential and integral element of the national oil and gas policy as expounded in the National Energy Program.

Sections 34 and 35 contain the relevant provisions imposing a tax on natural gas liquids (ethane, propane and butane):

34. (1) There shall be imposed, levied and collected on the first receipt of natural gas liquids produced at a gas processing plant or a gas reprocessing plant for removal from the plant a tax at the rate specified in subsection 35(1).

(2) Notwithstanding subsection (1), no tax is payable under this section in respect of.. .

(b) natural gas liquids injected as miscible flood material into a natural reservoir in Canada for the enhanced recovery of oil from that reservoir. . . .

35. (2) The tax imposed under section 34 is payable

(a) at the time the natural gas liquids are first received for removal from the gas

processing plant or gas reprocessing plant where they were produced; and

(b) by the person who owns the natural gas liquids at the time described in paragraph (a).

[Emphasis added.]

The collection mechanism for the tax is set out in sections 38 and 40. [1] It requires that the operator of a gas processing plant collect the tax imposed by section 34, when the gas leaves the plant gate, and file monthly returns with respect thereto. The 1982 legislation also added paragraph (g) to subsection 68(1):

A deduction from, or refund of, any of the taxes imposed by this Act may be granted . . .

(g) where the original receipt of . . . natural gas liquids was subject to tax

under Part V, but exemption is provided on subsequent use by that Part.

The scheme of the legislation, then, provided that a tax was payable on natural gas liquids but that no tax was payable with respect to gas used for certain purposes (injected as miscible flood material into a natural reservoir for the enhanced recovery of oil). The tax was collected, however, when the gas left the gate of the processing plant. A provision specifically authorized, if the gas was an exempt commodity, the granting of a refund of the moneys which had been collected. Because the tax was collected from "the owner" of the gas at the plant gate, the refund might or might not be payable to the same person who had originally paid the tax. If there had been a sale of the gas by the original owner, the new owner would be the person entitled to the refund. That person would, of course, have paid a price for the gas which included the tax.

The plaintiff purchased certain quantities of natural gas liquids during the years 1983-85, for use in a hydrocarbon miscible flood project. The gas was used for this project during the period May 24, 1985 to December 31, 1985. It was used as miscible flood material injected into a natural reservoir in order to enhance the recovery of oil. It also used some of its own gas for this purpose. On December 1, 1986 the plaintiff applied for a refund of the excise tax ($512,941.51) which had been paid pursuant to subsection 34(1). The Minister of National Revenue rejected the application. As of that date, Part V and paragraph 68(1)(g) of the Excise Tax Act had been repealed.

On May 23, 1985, notice was given by the government, as part of its budget proposals, that the Natural Gas and Gas Liquids Tax would be repealed. The Notice of Ways and Means Motion, introduced in the House of Commons on May 23, 1985, read in part:

Resolution 50. That the Natural Gas and Gas Liquids Tax be repealed.

Resolution 51. That any right to a refund or payment of taxes or other monies, or to a deduction in respect of such refund or payment, arising under section 44 [section 68 of R.S.C. 1985, c. E-15] of the Act be extinguished unless application in writing for such refund, payment or deduction is made within four years after the earliest time at which such an application could have been made and that no refund or payment be paid and no deduction be authorized in respect thereof where no application was made for a refund or payment of the taxes or monies or a deduction in respect of such refund or payment in that four year period.

Resolution 55. That any enactment founded on . . .

(c) paragraphs 11 to 14 and 50 come into force on June 1, 1985;

The implementing legislation, An Act to Amend the Excise Tax Act and to Amend Other Acts in Consequence Thereof, S.C. 1984-85-86, c. 9 was subsequently introduced and became law on March 4, 1986. Sections 14 and 23 of that statute retroactively repealed Part V as well as paragraph 68(1)(g) of the Excise Tax Act:

14. (1) Part 1V.1 [Part V of R.S.C. 1985, c. E-15] of the said Act is repealed.

(2) Subsection (1) shall be deemed to have come into force on June 1, 1985.

23. (1) Subsection 44(1) [68(1) in R.S.C. 1985, c. E-15] of the said Act is amended by . . . repealing paragraph (g) thereof.

23. (4) Subsections (1) . . . shall be deemed to have come into force on June 1, 1985.

As noted above, the plaintiff used the gas in question for tax exempt purposes before the amending legislation was passed on March 4, 1986. That use occurred largely after June 1, 1985, the date to which the relevant legislation was eventually retroactively repealed. The plaintiff applied for a refund on December 1, 1986. The plaintiff argues that its right to a refund survived the repeal of Part V of the Excise Tax Act (the Natural Gas and Natural Gas Liquids Tax) and the repeal of paragraph 68(1)(g).

Counsel for the plaintiff argues that: (1) the plaintiff had a right to the refund accrued or accruing before March 4, 1986, the date on which the repealing legislation received royal assent; (2) repealing legislation does not take away accrued or accruing rights unless it expressly so provides — see paragraph 43(c) of the Interpretation Act, R.S.C. 1985, c. I-21; [2] (3) the common law presumption of non-interference with vested rights also applies; (4) when the original taxing Act is read together with the repealing legislation, there is ambiguity as to what was intended; (5) Parliament did not intend by the repealing legislation to turn what had been a tax exempt commodity into one which was taxed.

Counsel for the defendant argues that (1) there was no right accrued or accruing to the plaintiff as of March 4, 1986; (2) if any such right existed it was merely the right to apply for a refund, that is, the right to take advantage of a statute, and this is not the type of right protected by paragraph 43(c) of the Interpretation Act; (3) the legislation is not ambiguous and therefore neither the presumption respecting non-interference with accrued or accruing rights, nor paragraph 43(c) of the Interpretation Act applies; (4) the legislation is clear and categorical — it repealed both the taxing provisions and the refund provisions; (5) there is simply no statutory mechanism available to the Minister pursuant to which he can consider the plaintiff’s application for a refund.

I note that in the agreed statement of facts filed by the parties it is asserted that the Ways and Means Motion of May 23, 1985 repealed Part V of the Excise Tax Act. This is not my understanding of the effect of a Ways and Means Motion; see: Dreidger, A Comment on Budget Taxation, (1982) 30 Can. Tax L. 562. I should also note that neither counsel argued that a repeal of the legislative provisions in question was effected by the Ways and Means Motion. Thus, despite the wording of the agreed statement of facts, there has been no confusion on this point. The provisions in question, then, Part V and paragraph 68(1)(g) of the Excise Tax Act were not repealed until March 4,1986, when the legislation to accomplish such came into force. That repeal was retroactive to the June 1, 1985 date.

I will deal first with the question of whether the plaintiff had a right accrued or accruing as of March 4, 1986. The determination of whether the plaintiff had such a right must be considered in reference to paragraph 43(c) of the Interpretation Act, R.S.C. 1985, c. 1-21. It is not a "right" or "rights" in the abstract which are under consideration. Paragraph 43(c) states:

Where an enactment is repealed in whole or in part, the repeal does not . . .

(c) affect any right, privilege, obligation or liability acquired, accrued or accruing or incurred under the enactment so repealed.

Counsel for the defendant cites the following cases as analogous to the situation in which the plaintiff finds itself: Gustavson Drilling (1964) Ltd. v. M.N.R., [1977] 1 S.C.R. 271 at 283; [1976] C.T.C. 1 at 9; Abbott v. Minister for Lands, [1895] A.C. 425 at 431 (P.C.); Western Leaseholds v. M.N.R., [1961] C.T.C. 490 at 499-502; 61 D.T.C. 1309 at 1314-17 (Ex. Ct.); Director of Public Works v. Ho Po Sang, [1961] 2 All E.R. 721 at 731-32 (P.C.). Counsel for the defendant cites these cases as persuasive support for the proposition that the plaintiff did not have a right accrued or accruing as of March 4, 1986.

In the Gustavson case the "right" of a taxpayer to claim certain expenses as deductions from income, for tax purposes, was in issue. The taxpayer sought to deduct expenses incurred from 1949 to 1960 from its income for the years 1965-1968. This it would have been able to do, under the special provisions of the Income Tax Act respecting oil drilling and exploration expenses, had it not in 1960 transferred substantially all of its assets to another corporation. In 1962 amendments to the Income Tax Act were enacted which were intended to liberalize the tax write off position for successor companies. This legislation provided that a company which had acquired substantially all the assets of another corporation would also inherit the right to deduct the drilling and exploration expenses which had been incurred by that company. Concomitantly the predecessor or vendor company was no longer entitled to such deductions. In response to the arguments of the predecessor company, Dickson, J. wrote at pages 281-3 (C.T.C. 8-9) of the decision:

. . . It may seem unfortunate that an amendment which was intended to liberalize the legislation by removing a barrier to the inheritance of drilling and exploration expenses should have the effect of denying a predecessor company such as the appellant from enjoying a right which it would have enjoyed in the absence of the repeal but the legislation as amended is unambiguous and clear.

It is perfectly obvious that most statutes in some way or other interfere with or encroach upon antecedent rights, and taxing statutes are no exception. The only rights which a taxpayer in any taxation year can be said to enjoy with respect to claims for exemption are those which the Income Tax Act of that year give him. The burden of the argument on behalf of appellant is that appellant has a continuing and vested right to deduct exploration and drilling expenses incurred by it, yet it must be patent that the Income Tax Acts of 1960 and earlier years conferred no rights in respect of the 1964 and later taxation years. One may fall into error by looking upon drilling and exploration expenses as if they were a bank account from which one can make withdrawals indefinitely or at least until the balance is

exhausted. No one has a vested right to continuance of the law as it stood in the past; in tax law it is imperative that legislation conform to changing social needs and governmental policy. A taxpayer may plan his financial affairs in reliance on the tax laws remaining the same; he takes the risk that the legislation may be changed.

The mere right existing in the members of the community or any class of them at the date of the repeal of a statute to take advantage of the repealed statute is not a right accrued: Abbot v. Minister of Lands, at p. 431; Western Leaseholds Ltd. v. Minister of National Revenue; Director of Public Works v. Ho Po Sang.

[Emphasis added.]

The Abbott case dealt with a plaintiff who had acquired certain Crown lands at a time when relevant legislation (the Crown Lands Alienation Act, 1861, Stats New South Wales, 48 Vict. No. 18, s. 22) provided that holders in fee simple of land granted by the Crown might make conditional purchases of adjoining property (not in excess of 320 acres). These were not to be subject to the conditions of residence applicable to conditional purchases in other cases. The relevant provisions of the original legislation were repealed in 1884. In 1892, the plaintiff sought to make a conditional purchase relying on the repealed provisions. The Judicial Committee of the Privy Council, in coming to its decision, stated at page 431:

It has been very common in the case of repealing statutes to save all rights accrued. If it were held that the effect of this was to leave it open to any one who could have taken advantage of any of the repealed enactments still to take advantage of them, the result would be very far-reaching.

It may be, as Windeyer J. observes, that the power to take advantage of an enactment may without impropriety be termed a "right". But the question is whether it is a “right accrued” within the meaning of the enactment which has to be construed.

Their Lordships think not, and they are confirmed in this opinion by the fact that the words relied on are found in conjunction with the words “obligations incurred or imposed.” They think that the mere right (assuming it to be properly so called) existing in the members of the community or any class of them to take advantage of an enactment, without any act done by an individual towards availing himself of that right, cannot properly be deemed a "right accrued" within the meaning of the enactment.

[Emphasis added.]

The Western Leaseholds case dealt with legislation which provided that no interest was payable on unpaid taxes in certain cases. The taxpayer filed a return on June 30, 1952. The Minister sent a notice of reassessment and a refund of taxes on July 30, 1952. On December 13,1956 the Minister sent a second notice of reassessment which showed over $71,000 to be owing. The relevant sections of the Income Tax Act, relating to the interest payable on unpaid taxes, had been repealed on July 28, 1955. The Exchequer Court held that the taxpayer did not have a right or privilege “acquired, accrued or incurred" within the meaning of the Interpretation Act so as to have the interest forgiven. This dispute related to the interest assessed with respect to the July 28, 1955-December 13, 1956 period. It was held at page 501-2 (D.T.C. 1316-17) of the decision:

In my opinion, the appellant did not have a right or privilege “acquired, accrued, accruing or incurred under the Act. . . repealed”, within the meaning of Section 19(1)(c) of the Interpretation Act, of such a nature as to give it the benefit of continued freedom from interest for a period subsequent to the date of the repeal of the relief-giving subsection.

There is support for this opinion in the decision of the Judicial Committee of the Privy Council in Abbott v. Minister of Lands, [1895] A.C. 425 . . .

Similarly [to the Abbott case] in my opinion, it ought to be held in the present case that the freedom from interest granted by subsection (6) of Section 50 was not a right or privilege "acquired, accrued, accruing or incurred" under the subsection in the sense that it continued to exist after the subsection was repealed and

freedom from interest was no longer permissible. While the appellant was not required to pay interest for the interest-free period as long as subsection (6) was in effect, this privilege, if it may be so called, disappeared when freedom from the payment of interest came to an end when the subsection was repealed on July 28, 1955.

Moreover, after subsection (6) was repealed subsection (1) was in full force without any limitation or relief from it with the result that the Minister had no authority to absolve the appellant from the payment of interest for any period subsequent to July 28, 1955. Indeed, counsel for the Minister submitted that he had acted very generously because the appellant was probably liable for interest for the whole period during which it had not paid tax on the amount owing by it. I need not determine this. Certainly, the Minister had to charge the appellant with interest for the period subsequent to July 28, 1955. The appellant has, therefore, no sound ground of complaint against the interest charged against it.

[Emphasis added.]

The facts of the Ho Po Sang case involve a defendant who had obtained a Crown lease of certain property and at the same time, had signed a memorandum of agreement with the appropriate government official (the Director of Public Works) concerning the terms of that lease — the defendant was to demolish the buildings on the property and develop it. At the time of the signing of the lease and the agreement, the demolition of the building was subject to a Landlord and Tenant Ordinance of Hong Kong which would have allowed the defendant, on obtaining a certificate from the Director of Public Works, to require tenants of the property to vacate the premises. The procedure proscribed by the ordinance required that after the defendant had made application for the required rebuilding certificate, and if the Director gave notice that he intended to issue a rebuilding certificate, the tenants in the affected building could petition the Governor in Council against the proposed issuance of the certificate. The would-be developer could then cross-petition. On June 11, 1956 the defendant made application for a certificate. On July 20, 1956 the Director gave notice of his intention to issue a rebuilding certificate. Petitions by the tenants and counter-petitions by the defendant were lodged with the Governor in Council. As of April 9, 1957 no decision had been taken by the Governor in Council but the relevant sections of the Landlord and Tenant Ordinance were repealed. After that date there were no express provisions which enabled consideration to be given to any pending petitions or cross-petitions, or which permitted the subsequent giving of rebuilding certificates. On October 2, 1957, the Governor in Council directed that a building certificate be issued. The Judicial Committee of the Privy Council held that the Governor in Council had no authority to issue the certificate and in coming to its decision stated, at pages 729-31 :

It becomes necessary to consider whether, on April 9, 1957, the lessee [developer] possessed some “right” under the ordinance which, by reason of the provisions of the Interpretation Ordinance, remained unaffected by the repeals which had effect as from that date.

In the present case, the position on Apr. 9, 1957, was that the lessee [developer] did not and could not know whether he would or would not be given a re-building certificate. Had there been no repeal, the petitions and cross-petition would in due course have been taken into consideration by the Governor in Council. Thereafter there would have been an exercise of discretion. The governor would have directed either that a certificate be given or be not given, and the decision of the Governor in Council would have been final. In these circumstances, their Lordships conclude that it could not properly be said that, on Apr. 9, the lessee [developer] had an accrued right to be given a re-building certificate. It follows that he had no accrued right to vacant possession of the premises. It was said that there were accrued rights to a certificate, and, consequently, to possession, subject only to the risk that these rights might be defeated, and it was said that, in the events that happened, the rights were not defeated. In their Lordships' view, such an approach is not warranted by the facts. On Apr. 9 the lessee had no right. He had no more than hope that the Governor in Council would give a favourable decision. So the first submission fails.

The further and, perhaps, more attractive submission which was presented on behalf of the lessee [developer] was that, on Apr. 9 he had an accrued right to have the matter taken into consideration by the Governor in Council, and that such right was (by reason of the Interpretation Ordinance) unaffected by the repeal, and that, consequently, the Governor in Council necessarily acted after Apr. 9 and that, in the result, a re-building certificate of full validity was issued, which led to entitlement to vacant possession of the premises. These submissions raise an interesting

question. At the time of the repeal, all the procedure under s. 3A and s. 3B had been followed, and it can properly be said that the stage had been reached when the lessee could expect and was entitled to have the petitions and cross-petition considered in due course by the Governor in Council and to have a decision reached. Could such expectation or entitlement be regarded as a right or a privilege, either acquired or accrued, within the meaning and intendment of the Interpretation Ordinance? Or was such expectation or entitlement something that necessarily came to an end at the time of the repeal? There might have been some express provision in the 1957 repealing ordinance by which it could have been ordained that petitions and cross-petitions awaiting consideration should receive such consideration in spite of the repeal, and that, subsequently, an effective rebuilding certificate could be given. The argument for the lessee is that the provisions of the Interpretation Ordinance made any such express enactment unnecessary.

In their Lordships' view, the entitlement of the lessee in the period prior to Apr. 9 to have the petitions and cross-petition considered was not such a "right". On Apr. 9 the lessee was quite unable to know whether or not he would be given a rebuilding certificate, and, until the petitions and cross-petition were taken into consideration by the Governor in Council, no one could know. The question was open and unresolved. The issue rested in the future. The lessee had no more than a hope or expectation that he would be given a re-building certificate, even though he may have had grounds for optimism as to his prospects. It is to be observed that, under s. 10(e), a repeal is not to affect any investigation, legal proceeding or remedy “in respect of any such right". The right referred to is the right mentioned in s. 10(c), i.e., a right acquired or accrued under a repealed enactment. This part of the provisions in para, (e) of s. 10 does not and cannot operate unless there is a right as contemplated in para. (c). It may be, therefore, that, under some repealed enactment, a right has been given but that, in respect of it, some investigation or legal proceeding is necessary. The right is then unaffected and preserved. It will be preserved even if a process of quantification is necessary. But there is a manifest distinction between an investigation in respect of a right and an investigation which is to decide whether some right should or should not be given. On a repeal, the former is preserved by the Interpretation Act. The latter is not.

[Emphasis added.]

I do not think any of the cases cited by counsel for the defendant are truly analogous to the facts in this case. There is no doubt that "no one has a vested right to continuance of the law as it stood in the past”, as was said in the Gustavson case. There is no doubt that "the mere right existing in the members of the community or any class of them at the date of the repeal of a statute to take advantage of the repealed statute is not a right accrued" as was Said in the cases cited. But, in this case the crucial factor which distinguishes it from those cited by counsel for the defendant is that at the date of the repeal of the statutory provisions in issue, there was an element of obligation existing on the defendant, to repay the moneys held by it. The plaintiff's "right" to the refund was not created by and did not originate with the filing of the application. The plaintiff's "right" had pre-existing content in much the same way as an individual has a right (to whatever claim is in issue) before a court declares such to be the case. What will be a right, how to define its scope, the time at which it can be said to have arisen will always be a bit of a metaphysical enquiry. But, where there is an element of obligation on one party, in my view, paragraph 43(c) of the Interpretation Act applies. That subsection expressly includes within its scope more than "rights" interpreted in a narrow sense. It refers to "any right, privilege, obligation or liability”.

Counsel for the defendant argues that the opening words of subsection 68(1) [previously 44(1)], demonstrate that the plaintiff had, in the words of the Ho Po Sang case, "no more than a hope" that the Minister would grant the refund. It is argued that since the section provides that a refund “of any taxes imposed by this Act may be granted" (emphasis added) the Minister had a discretion as to whether or not to grant a refund and that he was under no obligation to do so. The decision in Herdman v. M.N.R., [1983] C.T.C. 272; (1983), 48 N.R. 144 (F.C.A.) is cited as support for this proposition. I do not think the Herdman case helps the defendant's position. That case was concerned with an application for a refund of sales taxes which had been made in error. The issue was whether or not the Minister’s decision relating thereto could be the subject of a section 28 application to the Federal Court of Appeal. I understand Chief Justice Thurlow to be saying, in that decision, that the debate as to whether "may" in the above quoted statutory provision means "shall" rather than "may" is essentially a sterile debate. He indicated that while the authority given might be permissive, there is still an imperativeness to the provision. At page 276 (N.R. 149-150) of the decision he stated :

. . . I am of the opinion that the authority of subsection 44(1) to make refunds is permissive and leaves the authority charged with its administration with a discretion whether or not to grant the refund.

But that is far from saying that the authority can be exercised arbitrarily or capriciously. The statute authorizes a refund in particular situations. It does not authorize refusal for anything but sound reasons, for example, reasons grounded on the conduct of the applicant in relation to its proper liability for tax or its claim for a refund. Where it is apparent that the applicant is entitled to the money, whether because he has made errors in his calculations or because he has been unlawfully required to pay taxes that he did not owe or for which he was not liable to the Crown it would take reasons of equal or greater weight to justify keeping his money and depriving him of it.

Mr. Justice Le Dain in the Herdman case, at page 280 (N.R. 154) said:

. . . In my opinion this provision permits one to look at the context in which the word ''may" appears and to consider the possible application of the principle affirmed in Julius v. Lord Bishop of Oxford (1879-80), 5 App. Cas. 214, that a power may be coupled with a duty when its exercise is necessary to the effectuation of a right.

In so far as context is concerned, subsections (6), (7) and (7.1) of section 44 speak of the person “entitled” to the refund. That is an indication in my opinion that a refund is regarded by the statute as a matter of entitlement or right in the cases specified in subsection 44(1) and that the authority conferred on the Minister to make a refund is conferred as the means for giving effect to this right and thus gives rise to a duty on the principle recognized in Julius v. Lord Bishop of Oxford.

And Clement, D.J. at page 282 (N.R. 156):

Section 44(1) is directed to deductions, refunds and drawbacks of taxes imposed by the Act: in its relevant terms it provides:

44. (1) A deduction from, or refund of, any of the taxes imposed by this Act may be granted

(c) where the tax was paid in error;

The amount of $16,582.53 was paid as tax by the company in error. I am of opinion that in the circumstances in which this provision operates, the principle of interpretation expressed in the Julius v. Lord Bishop of Oxford, 5 A.C. 214, is applicable, and that the word "may" as it is used in the subsection permits the minister to determine whether the facts of a case bring it within one or other of the several specific grounds for refund or deduction: and if such is found to be the case, then a clear and imperative duty arises — in this case to refund the amount paid in error.

[Emphasis added.]

The decision in Re Falconbridge Nickel Mines Ltd. and Minister of Revenue for Ontario, [1981] C.T.C. 120; 121 D.L.R. (3d) 403 (Ont. C.A.) is directly on point. That decision dealt with an application for a refund of the overpayment of sales tax. The application for the refund was made in June of 1975. In April of 1975 the relevant legislation had been amended to require that application for refunds be made within two years of the date on which the tax had been paid. The June 1975 application was outside that two-year time limit. The relevant statutory provisions provided that the Treasurer of Ontario "may" refund any overpayment of tax. Mr. Justice Thorson discussed the use of "may" and “shall” in statutes and then, at pages 125-6 (D.L.R. 411), stated :

On April 8, 1975, when the 1975 amendment to s. 2(8) of the Retail Sales Tax Act was stated to have become effective, did the appellant have a “right” which the law will recognize as such? If so, is it a right which is protected by s. 14(1)(c) of the Interpretation Act as being one which, at that time, either had "accrued" or was “accruing” in the appellant's favour?

In my opinion the appellant did have such a right. It arose by virtue of the pre-1975 legislation, which in my opinion clearly contemplated that a claim for a refund of tax could be asserted by a taxpayer in the situation of the appellant, and that such a claim would, when it was received by the Minister, be considered by the Minister even if, as previously noted, the end result of such consideration might be that the claim was rejected.

There is no dispute that the appellant paid the tax here in question. Having paid an amount as tax in excess of what it could then or subsequently establish by satisfactory evidence to be the amount which in law it was required to pay, it had a right, which was not limited in time by the then applicable law governing refunds, to advance a claim to the Minister to have the amount of the overpayment refunded to it, and to have its claim considered and either accepted or rejected by the Minister, applying the principles and taking into account the considerations properly applied and taken into account by her in the exercise of the discretion which she had to make or refuse to make such a refund.

Given that the Minister’s discretion in the matter was, at most, a limited discretion as already mentioned, I do not think it can be said that what this appellant had was "no more than a hope or expectation” such as the Crown lessee was found to have had in the Ho Po Sang case. That case is clearly distinguishable from the present case as regards the nature of the right asserted, and in my opinion the decision in the Ho Po Sang case does not apply to bar this appellant from succeeding on the basis of the alternative position stated and argued by counsel on its behalf.

[Emphasis added.]

and at page 127 (D.L.R. 413):

Nor can I agree that because no claim for a refund was outstanding at the time of the 1975 amendment, whatever right the appellant had at that time was merely "theoretical". A right is no less a right recognized by the law solely because all of the steps necessary to be taken before it can be acted upon may not yet have been taken. In this case the right to claim a refund came into being once the overpayment of tax had been made. At that time there was no restriction in the law on the time within which the claim could be advanced; as already noted it was not until the 1975 amendment that a limitation was added doing away with the right of a taxpayer to seek a refund of tax more than two years after the date of payment of such tax.

[Emphasis added.]

In the present case, subsection 34(2) of the Excise Tax Act stated that "no tax is payable under this section in respect of . . . natural gas liquids injected as miscible flood material", the gas which underlies the plaintiff's claim in this case. The same section of the statute which imposed the tax on natural gas liquids declared that gas used for certain purposes was tax exempt. While the exact gas to which this might apply would not be identifiable until some time in the future, the charging section of the statute gave the gas a tax exempt status from the date on which the tax was imposed. What is more, by March 4, 1986, the date when the taxing provisions were repealed, the gas which was tax exempt was clearly identifiable. As of that date, the government (Minister of National Revenue) was in possession of moneys which had been collected, to which it clearly had no right. The taxes had been collected with respect to a tax exempt commodity. This constitutes more than "the mere right to take advantage of an enactment".

I conclude that the plaintiff in this case had, as of March 4, 1986, a right accrued or accruing to the moneys held by the defendant. As was said by Mr. Justice Thorson in the Falconbridge case, an amount was paid as tax, in excess of what should have been paid; just because a refund was outstanding and no application for a refund had been made, one should not conclude that the right was merely “theoretical”. A right is no less a right merely because all the steps necessary to be taken to ensure its enforcement have not yet been taken. In this case, the plaintiff had not yet filed an application for the refund but the right to the funds was the plaintiff's.

A more difficult problem, however, is the argument that Parliament intentionally wiped out that accrued right by enacting the March 4, 1986 legislation. This argument is based on the fact that Parliament repealed not only the charging sections of Part V but also the refund provisions found in paragraph 68(1)(g). While subsection 43(c) of the Interpretation Act provides that repealing legislation does not affect accrued or accruing rights, that provision only operates where a contrary intention does not appear in the statute (see subsection 3(1) of that Act). Also, even if the Members of Parliament and the government did not intend, in a subjective sense, to make the gas in question taxable, if the express words of the statute so provide (even though those words were enacted through inadvertence) then those words must be given effect. If there is an express repeal of the right which had accrued to the plaintiff, then it must be left to Parliament to enact legislation to correct the error if it was his to do so. I would note that I have been given no rational explanation as to why Parliament, in repealing the Natural Gas and Gas Liquids Tax, might intend to turn gas which had previously been tax exempt, into a taxed commodity.

There is no express repeal of the plaintiff's accrued right, in the sense of a provision stating “after June 1, 1985 no refunds of tax collected . . . will be payable”. Can one say that such repeal occurred, however, as a matter of necessary implication. I do not think that any conclusion in this regard can be drawn from the fact that the amendment of March 4, 1986 was made retroactive to June 1, 1985. I find nothing in that retroactivity which, by itself, would lead necessarily to the conclusion that accrued rights existing on March 4, 1986 were intended to be revoked. This in part arises from the fact that the tax exempt status under the terms of the legislation related back to the date of the imposition of the tax. Also, as of March 4, 1986, everything had been done by the plaintiff (except for the filing of an application) to entitle it to a refund and there was no express repeal of that right. The argument that Parliament intended as a matter of necessary implication to repeal the plaintiff's right is based solely on the fact that the authority in paragraph 68(1)(g) to make a refund in the case of Part V taxes was repealed. I am not willing to conclude, however, that the repeal of paragraph 68(1)(g) indicates that Parliament intended, as a matter of necessary implication, to repeal the plaintiff's accrued rights. At most it may have inadvertently repealed the refund mechanism and thereby made the right unenforceable, although I do not think this is the case.

The question must be asked, then, whether the plaintiff's right has become unenforceable because of the repeal of paragraph 68(1)(g). While initially driven to this conclusion, a reconsideration of the provisions of section 68 as they remain after the repeal of paragraph 68(1)(g) has led me to conclude otherwise. Those provisions read as follows:

68. (1) A deduction from, or refund of, any of the taxes imposed by this Act may be granted

(a) where an overpayment has been made by the taxpayer;

(b) where a refund or adjustment has been made to the taxpayer by a licensed air carrier under Part II . . .

(c) where the tax was paid in error;

(d) where the original . . .

68. (9) . . . no refund of or deduction from any of the taxes imposed by this Act shall be granted, and no payment of an amount equal to tax paid shall be made, under this section unless application in writing therefor is made to the Minister by the person entitled to the refund, deduction or amount within four years after the time the refund, deduction or amount first became payable under this section or the regulations.

(12) An application under subsection (9), (10) or (11) shall be made in such form and in such manner as the Minister may prescribe.

In my view, authority exists pursuant to paragraph 68(1)(a) to make the refund which the plaintiff seeks. On initial reading, that subsection would seem to apply only to the case where the taxpayer and the person claiming a refund are one and the same, but I think the provision can justifiably be read more broadly. In the present case, a taxpayer has made an overpayment by virtue of the fact that tax was paid on a tax exempt commodity. Therefore, paragraph 68(1)(a) applies. The mechanism for repayment is prescribed by the subsections which follow (e.g. subsections 68(9) and 68(12). I would indicate that this reading of paragraph 68(1)(a) together with subsections (9) and (12) was not one which was put to me at trial. Nevertheless, since it is a reading which I think those provisions can legitimately bear, they should be help applicable to the facts of this case.

For the reasons given, the plaintiff's claim is allowed. The plaintiff's application for a refund of the excise tax paid is referred back to the Minister of National Revenue for consideration on the merits. The plaintiff shall have its costs of this action.

Claim allowed.